RE:RE:RE:credit stockwatch = diamonds = Caca another great article... DIAM = CACA for when Carter get's all horned up about SA in a few weeks at the AGM.
Diamond & Specialty Minerals Summary for October 22, 2024
by Will Purcell
The diamond and specialty minerals stocks box score for Tuesday was a weak 81-87-142 as the TSX Venture Exchange rose four points to 627. Ewan Mason and George Read's Star Diamond Corp. (DIAM) closed unchanged at four cents on 354,000 shares.
Star Diamond continues to tread water with its Fort a la Corne diamond project in central Saskatchewan, where it remains caught in a Catch-22 situation. The company's stock is unlikely to show much life until it completes a prefeasibility study of a mine based on the Orion-South and Star kimberlites, but it is unable to start the study in a meaningful way until it raises cash to do the work.
Mr. Mason, the company's chairman and chief executive officer, said earlier this year that the study would cost between $3-million and $5-million, but he is loath to complete a financing at the company's shoestring share price. (And then there is the full feasibility study, expected to cost between $6-million and $10-million, which the company says will follow hard on the heels of the prefeasibility study.)
Given that Star Diamond also needs a few million dollars to cover administrative expenses next year, the company likely needs about $7-million in a near-term financing to keep the wolves from the door and get the consultants beavering away on the study. At four cents per share, a stopgap financing could easily add 175 million shares to the company's current tally of nearly 620 million shares, so Mr. Mason's quandary is clear.
"We cannot start the prefeasibility study until we get more money in the bank," Mr. Mason conceded, but he is adamant that Star Diamond will be able to raise the needed cash -- and soon -- without resorting to a massively dilutive financing that would swamp the company's current shareholders. If push does come to shove, Mr. Mason already has some dilutive options to choose from, but for now, he thinks that the company can get enough cash for the study from a more reasonable source.
And there are other options, Mr. Mason reminds investors. When the company signed its separation agreement with Rio Tinto Exploration Canada Inc. (RTEC), Star Diamond received full custody of the big Bauer trench cutter that RTEC had used to bulk sample the Star pipe five years ago. The rig was to have been used for an even larger sample of Orion South, but he believes Star can complete its studies without doing that work.
And so, the Bauer sits idle, but perhaps not for long, as Mr. Mason says there have been nibbles of interest in leasing the equipment. (Fortunately, the nibblers are in Saskatchewan, so drivers in other provinces need not fret the flashing ambers and the "long wide load" placards warning of a slow-moving behemoth wending its way to a job site. Indeed, RTEC may have been eager to hand the very expensive rig over to Star just to avoid the cost of moving and storing it.) Nevertheless, the Bauer proved its worth at the Fort a la Corne project, and it could be worth the leasing cost for another company looking to test some large project.
At last report, Star Diamond expected to have its prefeasibility by early next summer, although that target may be extended if the hunt for cash takes longer than expected. The good news is that it could be worth the wait, based on the company's expanded resource estimate. That calculation, rolled out in July, listed Star with 180 million tonnes indicated at 19.4 carats per hundred tonnes -- about 34.8 million carats -- and Orion South with 207 million tonnes indicated at 17.8 carats per hundred tonnes, good for another 37 million carats.
And so, the prefeasibility study will have nearly 72 million carats upon which to hang its assessment. (There are more carats -- 7.8 million at Star and 7.3 million at Orion South -- but they remain inferred and cannot be used in an advanced feasibility-calibre study.) That was a key reason that a long-promised feasibility update in 2018 morphed into a preliminary economic assessment, but while the study downgrade boosted the bottom line, touting a multibillion-dollar diamond project with a dream sheet is an unenviable task.